Perspectives on Retirement: Generation X

Generation X (born 1965 to 1978) entered the workforce in the late 1980s and is the first generation to have access to 401(k) plans for the majority of their working careers.

Seventy-seven percent of Generation X workers are saving for retirement and they started at age 28 (median). Among those participating in a 401(k) or similar plan, they contribute seven percent (median) of their annual pay.

Unfortunately, 30 percent of Generation X retirement plan participants have taken a plan loan or early withdrawal, with commonly cited reasons relating to paying off debt or unplanned major expenses. This may be partly explained by low levels of emergency savings. Generation X workers have saved just $5,000 (estimated median) to cover the cost of unexpected financial setbacks. Twenty-four percent have saved less than $1,000 for such emergencies.

The total household retirement savings for Generation X is $69,000 (estimated median). Just 12 percent are very confident that they will be able to fully retire with a comfortable lifestyle.

Generation X has entered its sandwich years, with many in the middle of raising children and looking after aging parents –while juggling their jobs. They may feel that they cannot afford to invest in their own retirement –or they may be strapped for time to plan for retirement. Forty percent of Generation X workers agree with the statement, “I prefer not to think about or concern myself with retirement investing until I get closer to my retirement date.”

Generation X is behind on their retirement savings, but they still have time to catch up if they begin focusing on it right now and start saving more. An excellent starting point is calculating retirement income needs and a savings goal. Fifty-two percent of Generation X workers say that they guessed their retirement savings needs. Just 12 percent used a retirement calculator or completed a worksheet.

One of the most important secrets to attaining retirement readiness is having a well-defined written strategy about retirement income needs, costs and expenses, and risk factors. The majority of Generation X workers (60 percent) say that they have a retirement strategy, but only 16 percent have a written plan (the other 44 percent have a plan but it is not written down)